Environmental, social, and governance (ESG) issues have increasingly become high-priority matters for leaders across industries. The impact of digital technology is unreservedly visible in transforming and improving business processes, and ESG is no exception.
Integrating ESG compliance and reporting into a company’s overall digital transformation strategy will be vital to maximising efficiency and creating more value from its digital solutions.
Unsurprisingly, ESG data and access to it is the primary focus at the early stages of this digital transformation journey given that various challenges would need to be addressed early on, predominantly on data management.
Core challenges in ESG data management
The management of ESG data has its own set of challenges due to the multiformity of the information and its sources, and these include:
Diverse ESG data sources
Different segments of the organisation and different entities along the organisation’s value chain will often have their own technology stacks, so the corresponding ESG data may often need to be sourced from and maintained in more than one system.
High data volumes
Tracking and maintaining ESG-relevant data can be costly for businesses, especially from a data quality perspective.
ESG data unavailability
The data required to meet the reporting needs may, in some cases, be partially available or maintained by organisations.
Poor or inconsistent data quality
In those cases where ESG-relevant data is available through the current systems, it may be poorly structured and unreliable to report on.
The future of ESG with digital transformation
Incorporating the right tools and establishing the required integrations across different data sources will help organisations avoid costly mistakes when it comes to meeting their ESG reporting needs, as these continue to increase. Companies will also be able to bring added value to their businesses and derive further insights on data once their digital transformation and ESG strategies align.
Moving forward, digital services on ESG will have a lot to offer in key areas of improvement:
Data centralisation
Establishing and streamlining access to ESG data collected from different sources and consolidating this in a centralised repository that would act as a ‘single source of truth’
ESG data catalogues
Automating the retrieval of ESG standardised data from trusted third-party sources to enrich the existing collected data from business operations
Data insights
Enhancing the data reporting and analytical capabilities to comply with ESG reporting standards and provide further data insights on ESG-relevant KPIs for internal reporting purposes
Why consider ESG platforms?
There exists a lot of space for digitalisation within the ESG scene, and one of the more prominent options is the implementation of an ESG platform which directly addresses the core challenges faced in data management and reporting.
ESG solutions serve to collect the relevant data, calculate key metrics, set and track ESG KPIs, and preview data in interactive dashboards from across all entities within a company. These tools would also facilitate the reporting process by ensuring consistent calculations while keeping ESG data safe and accessible from a single repository. This will help businesses to be compliant with ESG regulations, share their data with stakeholders and strategically manage ESG performance without requiring major changes on their existing platforms.
Such implementations should not conflict with a company’s overall strategy to reduce cost and optimise operational efficiency but rather reinforce it. Integrated dashboards can provide management with the required level of transparency, enabling and improving strategic sustainability management by C-level management.
Conclusion
Poor management of ESG data will increasingly limit the organisation’s ability to accurately report on ESG matters and achieve their environmental, social and governance targets. Employing the right ESG-centric technologies and tools will be key to gathering this data, tracking metrics and reporting performance promptly. To do this, we feel it is essential that organisations embed digital transformation into their ESG strategy to ensure efficiency and scalability moving forward.
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